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Amazon rallies 13% after-hours beating earnings with solid AWS growth

Amazon rallies 13% after-hours beating earnings with solid AWS growth
Dino Kurbegovic

Amazon (NASDAQ: AMZN) stock rallied by over 13% in the after-hours trading session after investors digested the firm’s earnings guidance. Namely, the company managed to post revenues of $121.2 billion, a 7.2% year-on-year (YoY) increase, beating estimates by $2.04 billion. However, the earnings per share (EPS) were -$0.20, while the consensus was for an EPS of $0.12.

Despite Amazon missing the bottom line, sales are expected to grow between 13% and 17%, with operating income projected to be between $0 and $3.5 billion. Moreover, the highlight seemed to be the acceleration seen in the cloud business, AWS. Net sales grew from $14.8 billion in 2021 to $19.74 billion in the second quarter of 2022, marking a 33% gain YoY. 

Furthermore, the advertising side of the business rose by 18%, posting revenues of $8.76 billion. The downside on the bottom line was filled with impacts that steered the quarter towards a $2 billion loss or -$0.20 EPS. This is due to AMZN’s stake in Rivian Automotive (NASDAQ: RIVN), which included a charge of $3.9 billion. 

AMZN chart and analysis

Analyzing Amazon stock, a double bottom pattern was noted on the daily chart before the firm released its earnings; this pattern often signals a change in momentum, which occurred in the after-hours session. In the last month, AMZN has been trading between $102.52 and $137.57, with the short-term trend remaining positive. 

The recent move has moved the support line to $125.51 and the resistance to $139.56.

AMZN 20-50-200 SMA lines chart. Source. data. See more stocks here.

TipRanks analysts have a ‘strong buy’ rating consensus, seeing the average price in the next 12 months reaching $171.67, 40.39% higher than the current trading price of $122.28.

Wall Street analysts’ price targets for AMZN. Source: TipRanks  

Despite the company’s headwinds with inflation and supply chain issues, Amazon still managed to post a solid quarter. Further development of macro trends will play a major role in fulfilling the growth prediction the management set out for the firm.

Long-term investors can be content with the showing so far in 2022, as it seems that AMZN is going from strength to strength.  

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